Costing Policy & Analysis
Research Administration Office

Memo Operating Guidance No. 97-04

Summarized below for use in calculating budgets for all contract and
grant proposals are the revised composite employee benefit rates applicable
beginning August 1, 1997. All rates are expressed as a percent of salaries.

STAFF PERSONNEL--CASUAL WITH CORE BENEFITS 6.0% (plus 6.2% OASDI when
applicable#)
(working more than 17.5 hrs/wk, excluding: students in casual
restricted jobs or an academic title designated as student assistant;
per diem, by agreement, and stipend only employees; and initial
appointment of temporary for less than three months)

#During the period July 1991 through October, 1992, casual employees
were allowed to choose between the Old Age, Survivors, Dependents Insurance
(OASDI) program under Social Security and the University Defined Contribution
Plan (also called 'Safe Harbor'). Effective October 19, 1992, newly hired
or rehired per diem, casual, housestaff, and other temporary employees
excluded from membership in the University retirement program are automatically
enrolled in the DCP Plan and may no longer elect OASDI. There is no employer
contribution to the DCP Plan. Therefore, in forecasting fringe benefits,
the OASDI portion of Social Security should be added to the projected fringe
benefit rates only for current employees who elected OASDI during the period
when it was available. Persons selecting the DCP option and all new hires
and rehires after October 19, 1992 are not eligible for OASDI.

##The University fringe benefit program for graduate students includes
Graduate Student Health Insurance and partial or full fee remission and/or
tuition remission according to plans developed at each campus. [Information
on tuition and fees is available via the Worldwide Web; the URL is: http://www.ucop.edu/ucophome/budget/fees.html#genfees]
Because each campus plan is different, to budget fringe benefits for graduate
students, each campus should estimate the Worker' s Compensation component
and then add on the projected cost of their campus GSHIP/fee/tuition remission
program. Student salaries should also be charged for unemployment insurance
and the Medicare portion of FICA during the summer (on the assumption that
the student will be working more than 50% time). Student employees who
have non-academic pay titles are eligible for incentive awards, in which
case the 1.3% assessment should also be added.

Long-Range Fringe Benefit Projections

During the past few years the cost of fringe benefits has stabilized
as a percent of salary. Until there are projected changes in the Social
Security tax or a reinstatement of contributions to the University of California
Retirement Program, projected increases in the fringe benefit rates for
subsequent years is discontinued. The fringe benefit rates included in
this memo can be used to budget fringe benefits for multi-year periods.

Schedules of Rates (Enclosure 1)

The enclosed Schedule 1 provides a detailed breakdown of the components
of the revised employee benefit composite rates. Schedule 2 provides a
revised breakdown of rates for students, casual staff personnel working
more than 17.5 hours/week, casual staff personnel working less than 17.5
hours/week, academic visiting titles, and academic summer employment.

Basis for Pricing of Fringe Benefits (Enclosure 2)

Enclosure 2 to this Memo sets forth the calculations, documentation,
and rationale used in the development of the various fringe benefit components
presented in the Enclosure 1 Schedules. Campus Contract and Grant offices
may want to inform campus personnel that detailed back-up for the composite
rates is available.'

Use of Fringe Benefit Rates

The Schedules provided in Enclosure 1 may be used for pricing proposal
budgets and are not to be used for billing purposes. Charges to contract
and grant awards are based upon the actual fringe benefit payments.

Alternatives to Use of the Composite Fringe Benefit Rates

Under special circumstances, the use of the composite fringe benefit
rate will understate actual costs for employee benefits (e.g., the actual
average salaries are substantially lower than the University-wide weighted
average or the majority belong to family dental and health plans). In those
unique situations, or when a more precise measurement of fringe benefit
costs is desirable, the costing of actual fringe benefit costs would be
warranted in proposal budgets, rather than total reliance on composite
rates.

Inclusion of Incentive Award Assessment

Beginning July 1, 1996, all funds supporting regular salary payments
to non-academic employees eligible for incentive awards will be assessed
a standard amount, currently projected at 1.3%. The assessment will be
charged to a benefit expense object code. When incentive award payments
are paid to individual employees, the payment will be made as taxable salary
from the sponsored project account/fund; funds sufficient to cover the
incentive award salary and associated fringe benefits will be transferred
from the Incentive Award Assessment Pool to the sponsored project account/fund.
Thus, beginning FY 1997, the incentive award program portion of the salary
will be budgeted and charged to each fund source as a fringe benefit. The
announcement of this mandatory assessment was made in a February 20, 1996,
memo to Vice Chancellors--Administration by Senior Vice President Kennedy.
Implementing procedures will be issued by the Office of the President.

HHS Region IX Notification of Fringe Benefit Changes

A copy of this Contract and Grant Memo has been transmitted to
the Division of Cost Allocation, HHS Region IX to satisfy the requirement
that the University notify its cognizant agency of changes in the University'
s employee benefit rate projections.

Staff Personnel--Casual with CORE Benefits (add OASDI when applicable)
(Working More Than 17.5 Hrs/Wk, Excluding: Students in Casual Restricted
Jobs or an Academic Title Designated as Student Assistant; Per Diem, By
Agreement, & Stipend Only Employees; and Initial Appointment of Temporary
for Less Than 3 Months)

Workers' Comp 1.37

Unemployment Insurance 0.21

Medicare portion of FICA 1.45

CORE Medical 1.65

CORE Life Insurance 0.02

Employee Incentive Award Assessment 1.30

6.01
rounded to: 6.0

Staff Personnel--Casual without CORE Benefits (add OASDI when applicable)
(Working Less Than 17.5 Hrs/Wk and By Agreement, Stipend Only, Per Diem,
and Temporary Employees)

Note: Campuses separately budget Graduate Student Health Insurance and
partial or full fee remission and tuition remission according to their
local campus plans and the cost of these benefits. Students with academic
pay titles are not eligible for incentive awards and their salaries should
not be so assessed.

Enclosure 2

BASIS FOR PRICING OF COSTS

1. Workers' Compensation - Self-Insured Program {7/96)

As part of the University's self-insurance program this benefit is assessed
at varying campus rates applied to each $100 gross payroll. The current
base rates maintained at campus locations are as follows:

This benefit is assessed at varying campus rates, and is used to support
employee wellness programs, training, education, and loss-prevention programs
The current base rates maintained at campus locations are as follows: